The Payday Habit

By Melissa Tosetti

How much money can you spend?

Asked in a different way – how much money can you safely spend without sacrificing your short-term goals such as travel and long term goals like retirement?

We have financial obligations in our bills.  We’re supposed to be putting money into savings accounts for our goals, but there are things we want to buy – activities we want to do to give us pleasure.  So, how do you figure out how much money is available to safely spend on these things?

This can be a challenging question for several reasons.

  • If your currency of choice is a credit card, it can give you a false sense of how much you can safely spend.
  • If you have a habit of looking at your checking account balance to determine the answer you can get thrown off by a charge that hasn’t come through yet.
  • If you don’t know how much you need to pay your bills, it’s impossible to know how much you can spend on other things.

The practice that has helped our clients answer this question is the Payday Habit, which is to pay all of your bills on payday, or as close to payday as possible, before spending a dime on anything else.

Some of the benefits of paying your bills on payday include:

  • Ensures the money to pay your bills is available.
  • Encourages you to have your bills organized, which increases your awareness of your financial situation.
  • Eliminates late fees.
  • Helps keep your credit score strong.
  • Gives you peace of mind, knowing that your bills have been paid.

There are two more steps to the Payday Habit:

  1.  The next step is to go to the gas station and fill your car with gas. If you use mass transit, then purchase your transit pass.
  2. Finally, on payday or as close to payday as possible, purchase your groceries.

By paying your bills, you’ve taken care of your financial obligations.

By purchasing gas and groceries, you’ve taken care of your financial needs.

Now you know exactly how much money you have to spend on the things you want in that pay period based on the money that is left over.  (This assumes you’ve implemented the important habit of Paying Yourself First and automated your long-term savings).

Habits and routines are key to Savvy Living, freeing our time and brainpower for far more interesting things.

Note: Over the years of working with clients to help them turn their day-to-day financial situation around, we’ve identified nine habits that are key to start living and sustaining a Savvy lifestyle.  The Payday Habit is #7.  You can read about all nine habits in the article The 9 Savvy Money Habits.


Melissa Tosetti is the founder of The Savvy Life and author of the international bestseller Living The Savvy Life. For the past eight years, she’s worked with over 525 individuals and families to create Spending Plans. Melissa also works with financial advisors and their clients doing cash flow planning as well as giving over 200 Savvy Living presentations via webinar and in-person to audiences across the U.S.

If you’d like to learn more about how Melissa works with clients visit The Savvy Life’s Programs page.

If you’d like to learn more about how Melissa works with financial advisors and their clients visit: The Savvy Life Advisor’s Page